Local tech start-ups can carve niche in China: IE Singapore

Suzhou, home to Singapore's Suzhou Industrial Park project with China, is one of four cities that Singapore firms looking to venture into China can consider, according to IE Singapore's Ms Lim Ai Leng.PHOTO: SUZHOU INDUSTRIAL PARK

As tech giants like Google and Uber can attest, China is a brutal place for global start-ups, but it could be a promising one for ambitious Singapore firms, said IE Singapore.

The trade agency believes local start-ups should not be deterred by the fact that plenty of companies have failed in China but, instead, take a more strategic approach.

It is clear that they might need some convincing. China has a huge market and a vibrant tech ecosystem but competition is white-hot and failure rates are high.

Global companies have struggled to navigate the different business culture and adapt their solutions to meet the market's needs. Many have bowed out, among them Google, Uber, Amazon and Facebook.

But Ms Lim Ai Leng, IE Singapore's divisional director for East China, said there is a place for Singapore tech start-ups in China.

"Singapore companies should look to be connected to China's vibrant ecosystem and to carve out a niche, instead of trying to conquer it," she noted.

They could initially consider four cities that are relatively more mature and are advanced in their tech ecosystems - Beijing, Shanghai, Suzhou and Shenzhen. Each has its particular strengths and opportunities.

LEVERAGING S'PORE'S STRENGTHS

Many Chinese enterprises and start-ups are internationalising. Singapore's familiarity and connections with South-east Asia, as well as its strengths in the English language and intellectual property, are value propositions.

MS LIM AI LENG, IE Singapore's divisional director for East China, on how Singapore firms can work with China as a partner.

Ms Lim said: "Beijing has the third-largest ecosystem in the world; Shanghai is a cosmopolitan city, which makes it easy for international investors to navigate.

"Suzhou makes a conducive and familiar environment for Singapore start-ups due to the presence of the NUS (Suzhou) Research Institute (NUSRI), and Shenzhen is strong in hardware innovation."

Chief executive Arrif Ziaudeen said: "We saw very strong growth in middle-and upper-class spending, particularly in the food and beverage sector. The demographics of the Shanghai market were aligned with our market-entry strategy of establishing a presence with high-quality restaurants."

MXR's managing director Gerald Cai said: "Suzhou was a natural choice because it is a focal point of the Singapore-China government partnership, and provided strong ... ecosystem support through various agencies and NUSRI."

Ms Lim said Singapore companies must first decide between using China as an end-market and as a collaboration partner. China's large population makes it a compelling end-market; start-ups can scale up once they have a suitable product.

With China as a partner, Singapore firms can co-create or adopt solutions for overseas expansion, particularly in South-east Asia. "Many Chinese enterprises and start-ups are internationalising," added Ms Lim. "Singapore's familiarity and connections with South-east Asia, as well as its strengths in the English language and intellectual property, are value propositions."

Second, Singapore firms must build a deep understanding of local market needs and habits, and then identify a strong value proposition that the market requires and which cannot be easily copied.

Ms Lim noted: "This is especially so for consumer-centric products, as Chinese start-ups will know the local market best. Singapore start-ups might have a greater edge in (business-to-business) solutions."

Third, local companies must be quick and find a strong local partner to swiftly grow the business.

Rather than aim to build a "perfect" product, firms should trial and testbed their products quickly to first build the market, and then improve them along the way, she said.

"Speed-to-market is critical. China's product development is quick for two main reasons: First, the consumer's speed in adopting new services is high. Second, companies in China are quick to adapt their products to suit the market."

A version of this article appeared in the print edition of The Straits Times on January 09, 2018, with the headline 'Local tech start-ups can carve niche in China: IE Singapore'. Print Edition | Subscribe

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